The U.S. Supreme Court’s recent ruling that state bans on same-sex marriages are unconstitutional presents a variety of opportunities for you to assist gay clients and change previous tax filing processes.

Two years ago, in the U.S. v. Windsor case, the Supreme Court shot down the Defense of Marriage Act — but that was only applicable to federal tax, employee benefits and estate planning matters.

That meant that same-sex married couples living in the handful of states that didn’t recognize same-sex marriages still had to file separate tax returns, among other things.

Last year was the first, and potentially last, year that will be necessary, thanks to the 5-4 ruling in Obergefell v. Hodges.

“Many of the financial arrangements that had been made by same-sex couples in the past will need to be reviewed,” said Chad Smith, a wealth management strategist at HD Vest Financial Services.

A financial planning practice of any size is likely to include  gay or lesbian clients, Smith added, and many of them may now feel encouraged to get married — which will mean these clients will be looking for financial advice.



At the top of the list of changes, as noted, will be married same-sex couples’ ability to file joint tax returns in all states. It is unclear, however, whether it will be possible or advisable to re-file amended 2014 state returns in such cases.

Meanwhile, certain planning techniques that gay couples have used in the past, such as adult adoption and other advanced trust planning that was set in place to protect inheritance rights, should be reviewed by a qualified attorney.  

With the marriage of any couple, there are many aspects of finance that should be reviewed. This includes the titling of bank and investment accounts, as well as estate planning documents including wills, powers of attorney and medical power documents and trust instruments.  

For affluent gay couples, many had put in place insurance and trust planning. When fully accorded marital status, of course, the surviving member of the couple will be entitled to the unlimited estate tax exemption This may or may not eliminate the need for the insurance and trust planning but should be reviewed by the client’s advisor.

Although the earlier Windsor ruling paved the way for changes in Social Security benefit-claiming strategies, these should now proceed full speed ahead where indicated for suitable married gay couples. The same changes would now pertain to beneficiary designations for retirement plans and ultimately the payout options for IRAs.



One issue that unmarried gay couples may face, Smith said, is the prospect of losing “companion benefits” at companies that adopted a companion benefit policy to support gay employees who lacked the opportunity to have a legal marriage. “Many of those companies may drop those policies now, in light of the fact that gay couples can now be legally married in all 50 states,” Smith said.

Given the harsh realities of divorce statistics for heterosexual couples, it is reasonable to suppose that you may eventually find yourself dealing with more break-ups of gay marriages,
with all of the attendant tax and financial implications.

Although the Obergefell decision represents a quantum leap in the rights of gay individuals, it did not change the fact that homosexuals are not a “protected class” under federal civil rights law and in many states. This means that while employment discrimination based on age, race, religion, national origin or veteran status is banned, in many states nothing prevents an employer with an anti-gay bias from firing an employee on the basis of sexual orientation.

Although that prospect has always existed, it might constrain some gay individuals from taking advantage of the newly expanded right to get married, given that doing so would amount to “going public” with their sexual orientation, thereby exposing them to the risk of employment discrimination.

HD Vest Financial Services® and its affiliates (collectively, “H.D. Vest, Inc.”) do not provide tax or accounting services. You should consult your tax professional regarding the tax implications of any investments.

The views and opinions presented in this article are those of Chad Smith and not of HD Vest Financial Services® or its subsidiaries.

HD Vest Financial Services® is the holding company for the group of companies providing financial services under the HD Vest name.

Securities offered through HD Vest Investment ServicesSM, Member SIPC, Advisory services offered through HD Vest Advisory ServicesSM, 6333 N. State Highway 161, Fourth Floor, Irving, TX 75038, 972-870-6000.

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